Question

An account with an initial deposit of $6,500 earns 7.25% annual interest, compounded

continuously. How much will the account be worth after 20 years​

Answer 1

$27,710.24

Explanation:

You want to know the value of $6500 earning 7.25% interest compounded continuously for 20 years.

Continuous compounding

The formula for the amount in an account earning interest at rate r compounded continuously is ...

A = P·e^(rt)

where P is the principal invested at rate r for t years.

Your amount is ...

A = $6500·e^(0.0725·20) = $6500·e^1.45 ≈ $27,710.24

The account will be worth about $27,710.24 after 20 years.